KARACHI, May 5, 2026 – The State Bank of Pakistan (SBP) has imposed a monetary penalty of Rs265,000 on Bank Makramah Limited for regulatory violations during the first quarter (January–March) of calendar year 2026.
According to disclosures in the bank’s financial statements for the quarter ended March 31, 2026, the penalty is significantly higher than Rs112,000 imposed in the same period last year.
Financial Performance Under Pressure
Bank Makramah reported a loss before tax of Rs1.211 billion, compared to Rs729 million in the corresponding period last year. However, loss after tax narrowed to Rs714.13 million from Rs869.83 million previously, resulting in an improved loss per share of Rs0.71 compared to Rs0.87 in March 2025.
Declining Investment Income
The bank’s investment income declined sharply due to lower interest rates and a reduction in its arbitrage book. The average policy rate, guided by the SBP, fell from 12.33% in the first quarter of 2025 to 10.50% in the current period.
As a result, average net investments dropped to Rs80.99 billion from Rs154.38 billion last year, while yields declined from 14.02% to 10.39%. Income from investments fell to Rs2.07 billion, compared to Rs5.34 billion in the same period last year.
Advances and Deposits Show Mixed Trends
Despite the overall pressure, income from advances increased to Rs497.38 million from Rs344.89 million, supported by improved net yields of 13.00%.
The bank’s deposits stood at Rs158.81 billion as of March 31, 2026. Its CASA ratio remained strong at 92.11%, helping reduce the cost of deposits from 7.74% to 6.61%.
Borrowing Costs and Expenses
Average repo borrowings declined significantly by Rs70.98 billion compared to last year, while the cost of borrowing fell to 10.57% from 12.45%.
Total non-markup income dropped to Rs0.45 billion from Rs1.02 billion. Meanwhile, operating expenses rose by 14.54% to Rs2.3 billion, reflecting ongoing cost management efforts.
Improvement in Asset Quality
The bank reported net recoveries of Rs630 million during the quarter, up from Rs201 million in the same period last year.
Its gross non-performing loan (NPL) ratio improved to 39.52% as of March 31, 2026, compared to 41.49% at the end of December 2025. The coverage ratio also strengthened slightly to 82.96%.